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Federal funds, new offer could end Troy transit center dispute

Photo by JOSE JUAREZ
Troy and Grand/Sakwa Properties continue to negotiate a deal that could open the new transit center.

A transit center held hostage by a 3-year-old legal dispute between the city of Troy and Grand/Sakwa Properties LLC may yet be liberated, with the aid of nearly $2 million in unspent federal funds.

At stake is a publicly financed center for bus and rail passengers behind the Midtown Square shopping center and condominium development built by Grand/Sakwa.

The Troy City Council is to vote Monday, April 7, on a renewed offer to Grand/Sakwa based on an appraisal from Allen & Associates Appraisal Group Inc. in Troy that values the transit center site at $1.05 million. That compares with a $550,000 offer last November based on an earlier appraisal.

The first offer sparked a condemnation lawsuit by the city in December after Grand/Sakwa didn't respond. Oakland County Circuit Judge Leo Bowman dismissed the case on Feb. 21 because the appraisal was based on land valuations in 2010, when the transit site was still undeveloped.

The new appraisal reflects 2014 land values and the $6.3 million transit center that was substantially completed last fall.

If the developer takes the offer, the city reacquires land that the Michigan Court of Appeals found had reverted to Grand/Sakwa ownership in June 2010. Then, presumably, Troy can open the center that's been sitting dormant for months.

If the offer is rejected or goes unanswered, both sides can expect to be back in circuit court for round two of condemnation before the end of the month.

Alan Greene, Dykema Gossett PLLC

City Attorney Lori Grigg Bluhm said negotiations have been ongoing, which Alan Greene, a partner at Detroit-based Dykema Gossett PLLC and attorney for Grand/Sakwa, and Troy Mayor Dane Slater confirm. But Greene said what the land is worth is only one issue.

"Money's not necessarily the driving force," he said. Other issues include hours of operation for the transit center and how bus traffic would affect the shopping center.

A 2008 report submitted to Troy officials estimates more than 160 buses could enter and leave the transit center each 24-hour day — but Troy Director of Economic and Community Development Mark Miller said that information is dated.

"There's just a laundry list of issues that were important to us that never got resolved. We've got a $75 million shopping and (residential) center we spent a lot of time and money on, and we want to make sure to protect its use," Greene said.

A source knowledgeable about both sides of the negotiations told Crain's that Gary Sakwa, Grand/Sakwa co-founder and managing partner, does not want to settle unless Troy puts up some of its own money, not just federal dollars. But Greene said where the money to acquire the land comes from is not relevant to Grand/Sakwa.

The road to court

The transit center and Grand/ Sakwa development have been tied together from the beginning.

Under the terms of a 2000 court agreement, Grand/Sakwa transferred title on 2.7 acres of the sprawling Midtown Square property southwest of Maple Road and Coolidge Highway to Troy in 2001 in exchange for obtaining the rezoning it needed to develop the project.

"There was a real conscientious effort on our part to reach out to Grand/Sakwa to address any concerns, and make sure the center would be an asset to the site and not a detriment in any way," said Michele Hodges, president of the Belle Isle Conservancy who was president of the Troy Chamber of Commerce at the time the center obtained federal funds and council support.

"We also reached out to our own membership on how to come to our own position about the center. It was very clear then that there was support from a diverse group of companies and advocacy groups."

But that agreement also called for the transit center land to revert to Grand/Sakwa by June 2010 if the city hadn't funded a transit center project by then.

The city and neighboring Birmingham had lined up several funding sources by that time, to collaborate on the center, which straddles the border of those cities. But Birmingham withdrew its support in 2011; Troy and Grand/Sakwa had contrasting views about what "funding" the center meant, and the developer took the city to court.

Last May, the Michigan Court of Appeals agreed with Grand/Sakwa. The state Supreme Court declined to revisit the opinion in November after construction on the center had largely wrapped.

Talks gear up

Meanwhile, the Troy City Council is opposed to using any city budget funds to repurchase the transit center, meaning the only available funding source could be federal transportation grants awarded for the center, Slater said. A $1.05 million offer should get council support, the mayor said, because it falls within the estimated $1.85 million in federal funds Troy has been told is available for a land acquisition.

Slater said he has been having discussions with Gary Sakwa and he expects those talks to continue. So far, he and Greene said, the two have not delved into specifics.

"Whether the company would accept less than the fair market value, either to be a good citizen or resolve those other nonfinancial issues, is something that hasn't been decided yet," Greene said.

"But where the money comes from is not really relevant. What is relevant is coming up with a settlement that's fair and reasonable to both sides, and is acceptable to Troy and the property owner, and resolves all these concerns or as many of them as possible."